Register for our free newsletter

Latest News

Saudi Jan CPI slows to 5.3 pct y/y, food costs lower

Consumer prices unchanged at +0.1 pct m/m in Jan.

February 9, 2011 2:36 by

Saudi Arabia’s annual inflation rate slowed to a nine-month low of 5.3 percent in January, as food prices fell more sharply, outpacing a rise in rents and transport costs, official data showed on Wednesday.

Annual inflation in the biggest Arab economy and the world’s top oil exporter eased from 5.4 percent in December to its lowest level since April 2010, data from Central Department of Statistics showed.

On a month-on-month basis, inflation stood at 0.1 percent in January, unchanged from December.

Consumer prices are expected to climb higher this year, lifted by soaring global food prices.

“Given commodity prices globally are rising, that should give into the headline figure for inflation in the later months, most likely the second half of the year,” said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

Sharp declines in food prices were offset by a rise in rental costs which rose 0.8 percent in January, but analysts expected prices to ease towards the end of the year.

“Monthly rental inflation tends to be higher in the first half of the year. This is partly because a lot of contracts are being re-negotiated,” said Paul Gamble, head of research at Jadwa Investment.

“I can see that rental inflation in year-on-year terms probably is going to stay roughly where it is in the next few months,” he said.

Food prices, which have the largest 26 percent weight in the basket, fell 0.5 percent on a monthly basis in January compared to a rise of 0.1 percent in the previous month.

“The number is related to specific food. It’s down to tomatoes and potatoes. Prices of both fell by 10 percent last month,” Gamble said.

Transport costs were up 0.7 percent in January compared to 0.4 percent in December.

In January, Saudi Arabia’s central bank governor said he was worried a global rise in food prices this year may drive up inflation in the import-reliant desert kingdom.

Analyst polled by Reuters expect average inflation of 5 percent this year, still well below a record high of 11.1 percent seen in July 2008. <GULFPOLL1>

The largest Arab economy is seen expanding by 4.3 percent in 2011 following an estimated 3.8 percent growth in 2010, helped by robust crude prices and generous government spending.

In December, Saudi Arabia announced an expansionary 2011 budget with plans to spend 580 billion riyals ($154.7 billion) this year, mainly on education and infrastructure projects.

(Additional Reporting by Martina Fuchs in Dubai; Editing by Toby Chopra)

Tags: , , , , ,

Leave a Comment